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July 2014 Newsletter

1 Jul 2014 Armadale 0 Comment

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Wow another financial year gone, that sure has gone so fast.

This newsletter is about what has been the last month’s topics on many people’s lips, Interest Rates.  We also cover “First Aid Focus” and about being underinsured, why we feel having regular property appraisals are so important so ensure you are not left underinsured.

Interest Rates

Along with the new year ahead we are lucky again for the 11th month in a row to have our interest rates still at a low 2.5 per cent, what a great boost for those with mortgages to get ahead and build a great buffer, even better news for those thinking of getting in to the property market as you have an awesome starting base and the opportunity to secure a great fixed interest rate so you know what your payments will be for the upcoming years, not a silly thing to do if things start increasing again, don’t you agree? It is a terrific opportunity for home owners and investors to buy residential property. Changes to lending criteria also mean it is a good time for business owners to purchase their own premises.

18 economists surveyed by comparison website finder.com.au had forecast that rates would remain on hold.

RP Data research director Tim Lawless said the Reserve Bank’s decision had been influenced by conditions in the Australian property market.

“RP Data recently reported that dwelling values were down 0.2 per cent over the June quarter, dragged down by a very weak May result and a partial recovery of values in June,” he said.

“Policymakers, including the Reserve Bank, are likely to be reassured by the slowdown in housing market conditions, where the rate of growth earlier in the year was increasingly viewed as unsustainable.”

Unlike residential property, commercial properties generally haven’t increased in price in the last five or six years. Combined with the relaxed lending conditions for commercial loans it is a great time for businesses to take the next step.

The start of a new financial year combined with the traditionally quieter winter market, always made changes to the rate unlikely.

The continued stability of rates will give buyers extra confidence, even with speculation an increase will eventually come.

We have seen property price growth soften as the market heads into winter, but even still, demand is strong as seen in the volume of sales and auction clearance rates around Australia’s various markets.

Meanwhile, ANZ chief economist Warren Hogan told the finder.com.au survey that the economy had been playing out as expected for the Reserve Bank.

“We’re seeing non-mining activity continue to improve and we’re seeing job creation, so essentially monetary policy is set to remain on hold for an extended period of time,” he said.

First Aid Focus – Did you know???970333-88fa15d2-c0ad-11e3-b362-fbc371d40a1d

Last month we focused heavily on “First Aid Focus”.

Why? Boy I am glad you asked….St John Ambulance released a confronting TV commercial to boost first aid awareness.  It ruffled a few feathers of course but then what would you expect, its very confronting, but truth always is isn’t it?  It is after all aimed at snapping Western Australians out of our complacency to think “it won’t happen to us”, but you know that is ignorance (and probably just the hope something so terrible won’t and can’t happen) but ….. it does, and when it does, are YOU prepared?

Its been years since I did my Seniors First Aid, felt like a couple of years ago and can not believe it is over 10 years ago (where did THAT go?) would I myself remember everything I learned?

EACH year almost 900 West Australians die because too many people lack basic first aid skills. Thousands more suffer irreversible brain damage and serious injury.

One version of the commercial — which shows a child hitting his head while diving into a swimming pool and his helpless mother watching him drown — is so graphic it won’t be shown before 8.30pm. Shorter versions will air during the day.

St John chief executive Tony Ahern said paramedics frequently attended emergencies when lives could have been saved if people on the scene knew basic first aid.

It has been estimated that fewer than five per cent of the Australian population have first-aid skills…..(I hope I and those I love are in their presence should the unimaginable happen).

In an interview with The Sunday Times, Mr Ahern, a former paramedic who spent 10 years on the road, said about 850 people die each year from cardiac arrest because no one was able to perform CPR before paramedics arrived. And about 20 die in car crashes each year because immediate first aid was not provided at the scene.

Those lives could be saved if more people knew what to do in life and death situations.

“Performing first aid before the ambulance arrives can often be the difference between life and death,” he said. “It can also prevent more serious injury.” Irreversible brain damage started once a person went more than four minutes without oxygen.

Last year, St John paramedics attended 1700 cases of cardiac arrest. Of those, about 40 per cent did not have CPR performed on the patient before they arrived, and had “zero chance of survival”. Depending on circumstances, those who did have CPR could have anything up to a 20 to 30 per cent chance of surviving.

Mr Ahern said St John aimed to have every person in WA first-aid trained. That was why it had decided to use the confronting commercial.

“I think the campaign will get the message out there better than before,” he said. “We have gotten the message out there, and the numbers we train in first aid show that is the case. But we won’t be happy until we can survey the community and know that everyone knows first aid.”

In the 60-second TV spot, that will air from tonight, a woman rushes to the aid of her drowning son in a backyard pool, only to be prevented from rescuing him by an invisible barrier.

Mr Ahern said the scenario should shock people into realising how helpless they will feel in that type of situation if they don’t know basic first aid.

“We need to do things from time to time that really makes people stop, listen and look and pay attention to the message,” he said. “I think the time is right just to remind people in this first aid space that it is confronting when you’re in this situation. The reality is, that happens every single day.

“I have personally seen the frustration, terror and anguish caused by not knowing what to do and knowing that it’s so simple to know what to do. That is the frustration for me.”

969803-858ed55e-c0ad-11e3-b362-fbc371d40a1dTHE BRAIN CAN DIE IN THREE MINUTES

Paramedics are trained on what to do, but there is nothing these St John’s paramedics can do if onlookers at an accident don’t know basic first aid.

It’s a situation ambulance officers come across far too often – and one that needs to change.

An ambulance can take on average between eight to 10 minutes to arrive, that is a long time for someone critically needing help.

In that time the brain dies within three minutes. There is a level of time there that is really critical for someone to open and clear an airway, to start doing CPR, to stop bleeding those sorts of things.

Ambulance officers were always relieved when somebody at the scene knows first aid.

To book a first aid course ring 1300 ST JOHN or visit stjohnambulance.com.aulesson child 000

For the Children to go online and play the Triple Zero kid’s challenge (also available on App Store and Google Play)




Another area to perk my own fears, insurance. Blech what a thought I know.  Last month a very close friend of mine was sadly affected personally through this.  The fire started in a building attached to the house, the fire crept up through the eaves, through the roof and into the home. By the time the fire brigade arrived

Your House May Be Underinsured!

It’s surprising how many people are underinsured. According to the Australian Security and Investments Commission (ASIC) up to 81% of Australians could be underinsured.

It’s easy to underestimate how much insurance we really need and sometimes it’s one of those things we put off, until potentially it’s too late.

Many people also renew insurance policies without taking into consideration additions to their home such as renovations, or additional purchases such as a new television.

Are you aware that SOME insurance companies have an “underinsured clause” written in. No? Neither did I, but it means if your home is worth $200,000.00 and you insure it for $100,000.00 then that equates to being insured at 50% the value of the home, therefore they will only pay you 50% of the insurance valued which would be $50,000.00.  That is some scary stuff isn’t it when you really think about it and what you potentially could be up to lose if some natural disaster were to hit your home, ie: think about that huge hail storm 22 March 2010.

As far as material goods go, your home or property is likely to be your most valuable asset. Insuring it for less than what it would cost you to rebuild makes about as much sense as insuring a Porsche at a Hyundai price. You might get away with it but at some stage the gap in cover is going to come back to haunt you.

Apart from not receiving enough money to cover the cost of your loss, there’s an added risk that can be far greater. If you have significantly under-insured your home or contents your insurer may have the right to pay only part of any loss because you’ve insured for only part of what it’s worth.

As above, let’s say you insure your home for $150 000 but it’s really worth $250 000 and a fire does $80 000 damage. Your insurer may have the right to reduce the payout in proportion to the level of under-insurance. In this case, there might be a payment of only $48 000.

The Insurance Council of Australia estimates that more than 40% of households fail to correctly assess the value of their home and contents, so there’s a real chance you could be under-insured.

After every natural disaster, too many people discover an awful truth: They don’t have enough insurance to rebuild their homes.

Nationwide, more than two-thirds of homeowners are underinsured, according to a survey by insurance services firm MSB, by an average of 18%.

That means someone whose house cost $200,000 to replace would find herself short by $36,000.

Where homes and rebuilding costs are higher, the problem can be even more acute. A survey by United Policyholders, a consumer advocacy group, said 75% of California homeowners affected by the 2007 wildfires in San Bernardino and Riverside counties were underinsured by an average of $240,000.

You might think insurers would err the other way, pushing folks to over-insure their homes. But that’s generally not the case.

It was through a recent event that happened to someone I know, they had a huge fire at the back of the property involving a shed.  The home was extensively damaged throughout as it spread through the roof and so forth.  It appears there are so many things that will not be covered due to them unfortunately being under insured.  This has prompted this article to remind you why it is SO important to review your insurance policies and ensure you home is adequately covered to avoid this very thing happening to you.

What if your home was completely destroyed by fire?article-2539626-1A9F0F2200000578-858_964x643

The average consumer thinks if a fire destroys my house the insurance company will pay to rebuild it, but that’s up to the coverage amount on the policy.

The cost of materials and labour change over time, usually for the worse, based on market forces and inflation.

So does your house, as a result of improvements, renovations and/or additions. Experts say this is just one reason to review and update your policy every couple of years.

Changes in local or state building codes can sometimes add to the cost.

There are limits on replacement costs and this is where the industry divides.

Risk of underinsurance

 Not enough cover

Underinsurance is when you don’t have enough insurance to cover all the costs of rebuilding your home. You are considered to be underinsured if your insurance covers less than 90% of the rebuilding costs.

Increasing your insurance cover may not cost very much, and you may even be able to get more cover for the same or a lower price.

 You could be underinsured because:

· It’s hard to estimate what it costs to rebuild a home

· Your insurance policy may be old (more than 3 years) and you may not have updated the level of cover needed

· You may have completed renovations which increase the value of your home

Check your policy now!

Most people only read their policy when they need to make a claim. Unfortunately, by this time it’s often too late. Check your policy now to see how much your insurer will pay and under what circumstances. Also check when your insurer will reject a claim.

Home insurance supplementary costs

More than meets the eye

Rebuilding a home after it has been damaged or destroyed can be a logistical and financial nightmare. There are many additional (or ‘supplementary’) costs you may not have thought of that need to be paid for, as part of the rebuild.

Learn more about these costs and how to work out if they are covered by your insurance policy.

What are supplementary costs?

Supplementary costs are extra expenses you have to pay if you need to rebuild your home. They are things you may not always immediately think of when working out what kind of home building insurance you need, including:

· Alternative accommodation while your house is rebuilt

· Removal of debris from the site

· Architects or other professionals to draw up plans

· Services to make your property safe for workers

· Lodging plans with your local council

 Gardening or landscaping costs

What supplementary costs does your policy cover?

Get your policy document and look in the section that describes when the insurer will pay claims for damages.

After you’ve found the right section of the policy, see how your insurer covers each cost. Insurers have three main ways to describe what they will pay.

The following table shows the three ways, using architects’ fees as an example:

Architects’ fees in your policy

When checking what supplementary costs are covered in your policy, ask:

· Are supplementary costs included in the sum insured?

· What is the limit or cap on these costs?

· If they are not covered, how will you cover the cost yourself?

Work out what supplementary costs you would have to pay if you needed to rebuild your home. Then see if you have enough home building insurance to cover those costs.

Total replacement’ policies have less risk

Policies with the lowest risk of underinsurance are ‘total replacement’ policies, where the insurer agrees to pay unlimited replacement costs.

‘Sum-insured’ policies have a slightly higher risk of underinsurance. You will be underinsured if there is a gap between the estimated rebuilding costs and the actual rebuilding costs.

Some sum-insured policies also offer an ‘extended cover’ policy that provides up to 30% on top of the sum insured in the event of a total loss – this is a good way to reduce the risk of underinsurance.

Whatever type of home insurance policy you have, there is always a risk of underinsurance. The golden rule is to get enough cover for the worst case scenario.

Are YOU facing the under-insurance trap?

Don’t wait to find out!  Get peace of mind right away by calling us on 9399 2122 or emailing rjackson@armadalerealestate.com.au with your contact details and one of our Property Consultants will be in touch to arrange a suitable time to come out and give your home an appraisal.

Tips to avoid being under-insured

Use the Home Building Calculator and Home Contents Calculator QBE has online to help you assess the value of your home and its contents.

1. Estimate the value of each item in terms of what it would cost you to replace today, NOT what you paid for it, and include this in your inventory.

2. If you have receipts for big ticket items, keep those with your list.

3. Write down any serial numbers or identifying elements and take photos of more unusual items such as paintings or jewellery.

4. Expensive jewellery items should be valued by a jeweller and re-valued every three to four years.

5. High risk items such as bicycles, jewellery, electrical items (e.g. home theatre entertainment systems and computers) and anything unusual such as musical instruments should all be specifically mentioned when finalising your policy so you are confident they are fully covered.

Some items may be better insured under a valuables policy rather than a contents policy. Discuss this with your insurer.

How to avoid under-insurance

Every time you receive your insurance renewal, re-evaluate your home and contents. What did you buy this year? How did you improve your home? Carefully consider the replacement cost of your home and everything in it. If you find you are under-insured, top up your insurance to cover the full amount. Do this every year and you’ll have peace of mind, knowing that you are completely covered.



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